DEFA picks natgas bid­der for 2016 sup­ply

Financial Mirror (Cyprus) - - FRONT PAGE -

The state-owned Nat­u­ral Gas Public Com­pany (DEFA) has cho­sen the sup­plier of an es­ti­mated 0.7-0.95 bln cu­bic me­tres a year for use in power gen­er­a­tion and it will com­mence ne­go­ti­a­tions with the pre­ferred bid­der to con­clude on a fi­nal pric­ing, pos­si­bly by the end of July.

Cyprus’ gas needs have been es­ti­mated at 1 bcm a year as the public Elec­tric­ity Au­thor­ity of Cyprus seeks cheaper and cleaner al­ter­na­tives to diesel fuel.

DEFA said its board “ex­am­ined and com­pleted the eval­u­a­tion of the latest re­vised com­mer­cial and fi­nan­cial pro­pos­als re­ceived from bid­ders ear­lier this month” in re­sponse to an in­vi­ta­tion for bids is­sued in Jan­uary 2014.

It said it eval­u­ated the pro­pos­als and will in­form the Min­is­ter of Energy, Com­merce, In­dus­try and Tourism of the re­sults.

“DEFA is bound by con­fi­den­tial­ity agree­ments and no more in­for­ma­tion will be re­leased at this stage,” it said.

The call for the ten­der was ini­tially is­sued in Oc­to­ber 2013 but re­vised and re-is­sued in Jan­uary 2014.

Re­ports sug­gested that the front-run­ners were the Greek con­sor­tium M&M as well as the Dutch Vi­tol Group, co-owner of the 300 mln euro VTT stor­age ter­mi­nal in Vas­si­liko.

The DEFA ten­der called for the sup­ply of nat­u­ral gas to the Cypriot mar­ket through two de­liv­ery routes – one in early 2016 and the other no later than the sec­ond half of 2017.

The in­terim sup­ply is ex­pected to plug a five year gap from cur­rent needs to the ex­port of nat­u­ral gas from the Cyprus off­shore gas­field of ‘Aphrodite’ op­er­ated by US-based Noble Energy and Is­raeli part­ners Delek and Avner.

Delek, a part­ner in the ad­ja­cent Is­raeli off­shore gas­field of Le­viathan was also an ear­lier bid­der, as was Azer­bai­jan’s sta­te­owned Socar.

Cyprus seems to have aban­doned plans to build a land-based re­gas­si­fi­ca­tion plant to utilise the out­put from Noble’s ‘Aphrodite’ gas­field, while the op­er­a­tor is se­ri­ously con­sid­er­ing a float­ing ter­mi­nal on-site from where it will ex­port the gas to Cyprus and prob­a­bly Egypt.

The gas­field, with es­ti­mated re­serves of 4.5 tcf, was de­clared ‘com­mer­cially vi­able’ by Noble last week, while other gas­field op­er­a­tors To­tal and ENI-Kogas have, for now, halted ex­plo­ration ef­forts af­ter ini­tial drills did not jus­tify fur­ther in­vest­ments, par­tic­u­larly in the cur­rent en­vi­ron­ment of crude oil prices in the range of $60 a bar­rel.

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